London, 16 May – US President Trump issued an executive order on Wednesday, May 8th, “to impose sanctions with respect to Iran’s iron, steel, aluminum, and copper sectors, Iran’s largest non-petroleum-related sources of export revenue.” These new sanctions take aim at “Iran’s revenue from the export of industrial metals — 10 percent of its export economy — and puts other nations on notice that allowing Iranian steel and other metals into [their] ports will no longer be tolerated.”
Through exports, Iran’s total earnings last year was less than $100 billion. Oil is reported to be the big earner, making around $50 billion of the total. $44.3 billion was the total amount of Iran’s non-petroleum exports according to the Iranian Ministry of Industry, Mine, and Trade Promotion Organization. Add the two figures together sand they equal an amount close to $95 billion. Ten percent of this is $9.5 billion.
A report by The Ministry of Industry, entitled “Iran’s Foreign Trade Performance,” classifies the statistics for non-petroleum exports. A chart shows that Iran exported around $3.9 billion worth of “cast iron, iron and steel” and close to $700 million worth of “copper and copper products.” However, there is no mention of aluminum. Adding these numbers shows a total export value for metals at $5 billion. Metals make up around five percent of Iran’s total earnings from exports.
The Ministry of Industry’s statistics display a similar picture. Its latest report published in early 2019 shows the total export volume of “basic metals” in the 10 months between March 21, 2018 to January 20, 2019, was around $4.3 billion — close to the estimate presented in the report.
These figures, however, are from last year when, despite the American sanctions, Iran succeeded in maintaining exports of crude oil at a level higher than 1.2 million barrels a day. But, given the situation today, it may be more realistic to estimate that Iranian oil exports will be far more affected by the sanctions, and the estimate that metals comprise 10 percent of Iran’s export revenues may not seem exaggerated.
In the context of Iran’s overall foreign trade, the sanctions will not only have an impact on the actual export of iron, copper, and aluminum, they will also disrupt the production process and the domestic market. The volume of exports of these metals is less than eight million tons, the rest is used domestically. Any reduction in production can worsen the recession in Iran’s metal industry.
With Iran’s shocking recession, one would believe that domestic consumption and demand will drop, because no one has the purchasing power. This will also have a domino effect on the metal industry, as well as on other economic sectors. The extension of American sanctions to the metal industry will deepen the recession. It will also reduce government revenues and, tragically, have a very negative effect on the lives of all Iranians.